one more time, for good measure. swap of the day. clear wire, sprint buying a part of clear wire it doesn't already own. some shareholders have been holding out for higher offers. finally being acquired. but it's done, finished. >> david faber, take a bow. >> we'll be ready to talk about that right now. in 13 seconds. >> it was a fascinating hour with david tepper. >> yeah. i'm still going through it. i was taking nose e ining notes talking. >> "squawk on the street" begins right now. good monday morning. welcome to "squawk on the street." we are live from the new york stock exchange. let's take a look at the u.s. futures set up for the open first of the week. dow looking at about 50 points

right after the open. as for the action in europe, taking its cues from the united states. we'll see a big rally in china extending one of its biggest rallies in three years. we have a mixed bag in europe with italy up by about .2 of 1%. >> we'll do our best to keep focused on the business day. we'll be following the tragic shooting in connecticut, of course. the new york stock exchange will hold a moment of silence to honor the victims in the next few moments, and we'll be looking at the president's call for meaningful action and the politics of gun control. >> let's get to a road map for this morning. it starts with apple. under pressure once again. even dipping below $500 a share at some point this morning. shares will remain range bound near term. iphone 5 sales and cannibalization among the region. >> other concessions from the gop, the speaker proposing tax hikes for millionaires. could this be the tipping point. moving the talks beyond deadlock. >> a big week for earnings.

yes, earnings. fedex, research in motion among the companies reporting. so finally maybe we'll be talking about fundamentals in the stock market more than just the cliff. we've got to talk about apple reversing its move lower this morning, sold more than 2 million iphone 5s in china. the best debut for any iphone in the china market. apple shares are higher as we mentioned. moving away from market bear territory. apple has been downgraded from a buy rating here. interesting, in very detailed analysis, by three citigroup analysts, jim, among them, it's interesting because they cited this of what you hear a lot about, and even though they're inconclusive, you can't rule out the fact that iphone 5 sales weren't as good as they expected. they're saying, you know what, we'll pull back here.

>> analysts react to stocks. it's unfortunate. stock goes down, you find a reason to not like it. a stock goes up, you find a reason to like it. iphone 5, maybe, maybe not. the suppliers are so tight-lipped. i'm talking to a company this week who is an assembler of it. they would lose the contract if they spoke out loud about it. if i were an analyst, i would say, this stock's going down. i don't want to not like it. >> what about the sentiment change and is it something investors should take note of? i think it is fascinating how now -- again, you get approached, i'm sure, all the time, i do as well, baseball practice, what's going on with apple, whatever, during the course of a weekend. because it is so widely owned. >> it has to go down because of that. >> sentiment has changed. suddenly it's well, yeah, those margins have to be under attack giving how much market share samsung has.

how can they maintain that margin. >> china came out, the news is good. because the stock was going down, we have to presume the news was not as good as the downgrade said. it's not an expensive stock. it's a stock that's overowned. you need to have the -- i went to a doctor this morning, and apple didn't come up. i was thinking, hey, could be closer to -- it did not come up. the first stock that didn't come up. i had to go to the dentist just to get a dentist check. how many people are worried about apple. >> we did crack 500, just below 500. it's funny you talk about the snowball effect, from bmo, from pacific, i mean, this thing is taking on a bit of a life of its own. >> the point, of course, the stock goes down, this much cash, and that much dividend, i know that people don't want to hear this. i know my friend doug doesn't want to hear this. but again, your taxes are going

up. stock goes down. analysts get negative. taxes going up. let's sell the stock. i converted my i.r.a. to my roth i.r.a. last week, because i want to be able to pay the taxes now. it just makes a lot of sense. maybe we revisit the stock in 2013. my trust owns it. it's like, am i excited about line in the sand. it tends to be erased by the waves. >> to david's point, there's a real focus now on the fundamental story. so within citigroup they're saying samsung is gaining share. the samsung analysts in asia, aggressive on samsung shares. about 27% market share. their surveys are indicating that the competitive advantages that apple used to have in the marketplace are no longer. they're diminishing.

apple doesn't have the mobile deal locked up until late in 2013. they're really at a disadvantage at this point in terms of expanding their markets at this point. >> that will be one of many questions we'll hear. everybody comes back to the multiples. time and again. as we did when it was going up. >> why can't it be $700 a share, it's only trading at 14 times, you know. >> you do wonder if there isn't some 600 billion plus limit to have market caps above that. and then we never seem to -- once you start talking about a trillion-dollar market cap, it's like the cover of "sports illustrated." >> to be a little facetious, at the beginning of my show, for years i always say the dow, s&p, nasdaq, and now i say, and apple. i'm just saying that the

overfocus, i'll play that game. but samsung, i have been saying for about six months that samsung was kicking butt in asia. because one of my best ceos just said, on air, listen, samsung's crushing them. when the stock goes down, we're deeply focused on how much better samsung is doing. you get to the end of the tax year, and apple unveils a new product. they need to knock this over. if they don't blow us away, people go, you know -- i have a couple of friends at samsung. they kind of like it. i don't have anyone younger who likes the samsung. but this is america. i know samsung's better, the wireless works better, europe doesn't have the right sink syn apple. >> on that point, some analysts staying firm on their target.

topeka with their famous 1,111. brian's not moving. >> no, he's not. katie in her firing of apple as well. >> what was her qualcomm target? remember, my friend, henry had some high-priced targets. they were realized on amazon. that turned out to be one of the great stocks ever. i caution people if you're an analyst, you feel really pressured by the stock. by the stock to be negative. you feel like you've got to find some way to distance myself from apple. their doctor probably had it. but not to be too facetious about it, it's an overowned stock and getting overhanded as it goes down. let's see when the people with big profits are done taking profits. in 2013 you don't want to take a profit necessarily, because you'll have to pay higher taxes.

>> speaker boehner offering $1 trillion in revenue enhancements, including higher tax rates on top earners. but spending cuts as well from the white house in return, the one-for-one ratio we talked so much about. the one year lift in the debt limit which could be another talking point. but harwood this morning on squawk, guys, saying there is suddenly signs of optimism, hope that this actually gets done. >> the president giving in at all? i thought the president was just saying, don't bother me now, not ever. i think the debate's changed. i really feel like the republicans said raise taxes. aren't they all at risk? running the risk that norquist, king of the republican party, will now strike against them? >> the question is how much boehner can get the vote in the house. >> grover has said point blank, you're finished if you vote for a tax increase.

grover so far has been much more powerful than boehner. kind of like the shadow government of the republican party. what i'm saying is, groefrver's been saying this on air. saying, basically, listen, those who get out of line will be dealt with. period. that's very powerful. what is boehner's threat, to remove you from a committee, versus grover's threat to remove you from your seat? who has the power? >> i'll tell you who has the power, the president does. as of january 1st, everybody's taxes go up and we start having a conversation about tax cuts. >> and that's where i think -- that's where it's going. >> it's the 17th today. check your watch while you're on the air. with my eyes i can't even see the date anyway. >> he's always on me, this one.

>> does the president want to go over the cliff? it seems like he wants to go over the cliff. i refer to grover, because boehner doesn't seem to have the power and grover does. >> the point, again, bob corker's pledge is not to me, it is to the voters of tennessee, that's the argument he's made again and again. if he wants to have a different conversation with the voters, that's his choice. >> why is corker the coolest man on earth? who does he play golf with? peyton manning. >> really? >> he's giving me all the big -- the minimum tax. i said, what are you up to this weekend? he said, i played golf with peyton manning. i said, are you kidding me? that seems to be more important to you than the fiscal cliff. >> 11-3? >> they still need home field advantage.

>> they're competing for a first round play-off. what peyton has done is just amazing. steve liesman's exclusive with lacquer. one more look at futures this morning. we'll cover what 10% on squawk earlier today. and a lot more when "squawk on the street" comes right back. [ male announcer ] at scottrade,

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busy week shaping up with futures currently up about 45. a lot of data on the way. got empire this morning. but later on in the week, housing numbers final q3 gdp. keeping a close eye on newtown, connecticut, our hearts and prayers going out to the victims there. remembering those who lost their lives at sandy hook elementary in newtown.

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time for the "mad dash" on a monday morning. apple gets an inordinate amount of attention. but it's not the sole source of pain. >> no. i'll tell you something, carl, we used to try to figure out who is in the apple device. tear it down, what do you find, qualcomm had been in there, skyworks, very big contracts. well, anybody who is tainted, neighbor who is in is now tainted. bernstein comes out and says, look, the whole qualcomm related apple sell-off, it should be a reminder that there are other things going for qualcomm. they do have 4 g.

skyworks, skws, has been similarly appointed. when you see a stock like this break down, people don't know what to do, because you're not allowed to come out, you're not allowed to mention apple. jpl, an assemble erassembler. tim cook, the ceo of apple says, don't worry about your apple business anymore, you just lost it. jay reports this week, i think a lot of it has been, maybe apple is slowing. so be careful. there's a lot of hidden apple stories. the other side is true, too. now, texas instruments was downgraded this morning. it will be very interesting to see, cypress, let's mention cypress, it is not an apple story. when you see these stories that are not apple, even though they haven't done that well, if we can look at cypress. very big yield. this started bottoming when we heard problems. they're a kindle play.

people are scrambling to be away from apple. look at kindle. let's look at amazon. if you really believe you can get a yield here, you get terrific management by t.j. rogers. maybe that's where you have to be. >> the chip equivalent of what dell and hp have done over the past couple of weeks. >> the problem with all of this is, the reason why these are going up is because they're not apple. why did they go down? because they were not -- they're not apple. i want to caution people, you ought to have more reason to buy stock than apple tie-in. qualcomm is a good company, doing a lot of things right. the idea of throwing it away, it shows there's an uninformed panic about anything apple. it's a contagion apple. i would caution people not to just throw away a stock because it has apple in it. >> as you said to a twitter follower today, what's your edge. >> you've got to know something. i'm not talking about inside information. i'm just saying, when you bought

something, did you buy it just because of apple? because now you're going to have to sell it. if you bought qualcomm because of why it may do well in the revolution of 4 g, then you can stick with it. if you only bought it because you thought it was apple, i know you're going to blow it out. i'm trying to caution people, really learn why you buy something. skyworks solution has been just crushed, because it's an apple play. when they first didn't get into apple, it got crushed. >> sure. >> let's be common senseical. whether you should look at hershey's and be a consultant company like accenture. don't be so apple centric as to feel like, wow, i'm done with this market entirely. >> great advice, jim. can apple shake off the jitters after falling below 500 free market. and the richmond fed president

is at odds with bernanke. a week of action gets under way after the opening bell which is, of course, in just a few minutes. i always wait until the last minute.

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you're watching cnbc "squawk on the street." we're here at the financial capital of the world. the opening bell should ring in just about 4 1/2 minutes' time. oracle on tuesday, fedex on wednesday, thursday nike and research in motion. monster over the past three months outperforming apple hands down. it's amazing to see the stock turn around on the anticipation of an operating system which is much delayed. so finally out is good. the. >> one thing they did do, i was always surprised when they did the restructuring, they closed so many factories, whatever cash flow they bring in, it can be monetized. and perhaps their balance sheet would be in trouble. the balance sheet is quite good. the device itself shows you where apple has fallen, too.

suddenly we think, maybe that device is a killer. maybe people won't defect to apple. apple isn't as good as samsung. it allows research in motion to sneak up. people at one point said, apple storming the enterprise. now we think that apple's losing the enterprise. >> wow. we should mention a big coffee deal just announced. it's big in the sense of who is buying it and what they bought already. ben kaiser is buying caribou coffee at $16 a share. a 13% premium over friday's closing price. keep in mind that ben kaiser already did a coffee deal not too long ago. they bought pete's coffee and tea last summer. that was almost -- it was a $970 million deal. they're going big, doubling down in coffee at this point. >> one way to look at this.

i was thinking, starbucks is in a position, i had a great meeting a couple weeks ago. maybe this is just a sign that this coffee bull market continues. if there's enough room for all these different brands, i find this rather surprising, but there are a lot of people who have not cut back on coffee for certain. and it's still an expanding market. starbucks billed its tea is in the market. but this is a bull market in coffee. >> i drink it all the time. >> i do, too. >> we need magic cups here on the set. >> yeah. wow. >> you mentioned on friday a lot of big earnings this week. oracle, fedex, as we said, nike. what do you think? in terms of earnings, it doesn't feel like the last couple of weeks of december. >> no. it's really an amazing time. everything is being put through a fiscal cliff analysis. here's nike, a chinese play.

oracle, expectations big data play. here's darden, can they turn around red lobster. i think one of the problems is, there's an article today about what cliff. and that's because when the individual stocks, unless they reference the cliff, you just don't feel that it plays a role. >> you've got the journal and the "times" with both stories about how next year might be okay in terms of cap x. tepper on squawk today, using a phrase, i'm not sure if we can repeat, in terms of putting your assets toward stocks when the fed is printing so much -- >> do you want to say it? >> i'll let david say it. >> no. >> when you are -- saying you're driving fast, another way of saying pedal to the medal -- >> to the wall. >> to the wall, all right. >> he also made a mention of carried interest, saying get rid of it. >> that's the conversion, by the

way, people during the '80s, ronald reagan hated the conversion of ordinary income to capital gains. it was a scourge for him. they've so discredited it, now reagan seems like a radical democrat. >> fedex also on tap this week. they're actually here doing the honors this morning. fedex workers celebrating the holiday shopping season. >> look at the run in copper that we've had, is up for at least five sessions. you mentioned the copper, the

china plays. the comments. the caterpillars of the world. >> remember when ets, used to buy the actual commodity, i don't know how much, but i do see there's a lot of things that tell me that it indicates maybe we reverse. i don't like big up monday openings. i feel like they often tend to fool people. the empire was not good. it's mixed here. it's just definitively mixed. we're thirsty for those earnings. oracle could be big. ge analysts' meetings could be big. >> it is expected to give guidance for 2013. there's a 2:00 p.m. eastern time conference call, i believe, associated with that. so we may be learning some things in terms of at least our expectations next year from ge. increased its dividend last week, that not that long ago during the financial crisis was

cut. rather substantially. over the last year, ge capital has begun paying a dividend yet again to its parent ge. and so it will be interesting to hear. we should point out ge still owns 49% as well as universal. >> ge made a major move. into oil and gas. particularly natural gas. which hardly a day goes by that we don't see an article that says, natural gas could be part of the revolution. there's not a lot going on in the country, because there's too much natural gas. >> "wall street journal" this morning looks at best buy, says it might not even be worth its current value. last week, postponing a deadline for any bid. >> we want to look at shares, just up 1% or so after a tumultuous end of the week. up huge on thursday.

down about the same on friday. we'll see. february 1st to february 28th is now the window by which the founder, co-founder, mr. schulze, has an opportunity to make a bid. we'll see if he comes with anything, and more importantly we'll sew how christmas does and how the fiscal year went for this company. which we know is under certain pressures. new ceo who does have a plan. no timelines associated with that plan. he's not going in like jcpenney, 29% done, 35% done. he won't give any metrics in terms of measuring. there is belief perhaps there's a chance there. we'll see. >> actively picking up other companies in the fast moving consumer goods, beauty, fashion. do you regard them as something as a company who has just decided to build -- are they in -- people hear about -- pitch their business all the time. >> they are aggressive. >> they really are.

who are those guys? >> they control coty, which made the hostile bid and failed for avon some time back, earlier this year. yeah, they are very aggressive. >> i know you and i, when we get -- well -- >> what were you going to say about you and david? >> one of the places i like to shop. >> i had a feeling that jimmy chu was going to break your mold. this is interesting. >> me and carl are battling. >> it just seems to be that like this is this quiet accumulator of really fast-moving, high multiple brands. maybe it's a company we ought to put on the radar screen as being the next great big consumer products company out there. kind of impressed with them. >> they are being very aggressive. >> at a time when we say assets are cheap, they seem to be listening. >> fascinating piece in the "times" about instagram and how they reportedly had an offer

from twitter for $500 million and change in cash and stock. and facebook bought for more than $1 billion. it wasn't exactly a billion. >> we've seen that knob of times for these early stage companies, instagram being one of the key ones. how many employees did they have? >> 13 employees. >> you like to aim for the value. >> they promised to have fewer people. >> it was 90 people. very close ratio. >> we also point out it's been a home run because -- it seems like an anti-dote. $11 billion well spent, david. >> one of the more interesting deals we've seen this year. >> it's a per capita thing. >> we could go that route, yeah. >> staples announcing the

resignation of its coo, that's at the top of the hour. stock moving down about half a percent. michael miles jr. is leaving to go to an investment firm in boston. but this is not something you want to see, a top manager leave a company. >> office max has been the star of late. this group is a horrible group. a lot of people feel it's been amazoned. >> or walmarted. >> not a lot of small businesses creation obviously. it's been -- staples was a great stock for a long time. and it has been a total bust. just bust. >> all right. let's check with bob pisani on the floor this morning with what's going on. >> happy monday, everyone. i want to bring you news on night capital. the board meeting has begun. remember, they are considering competing offers from two competitors.

it's not clear if both companies have increased their offers. we know what they are roughly. we've been trying to get information over the weekend about whether they've increased the offers or not. not clear we'll get any information on whether they make a decision today or not. they could decide to do nothing. the board could decide to do nothing and keep the company intact. but there is a problem with that. it was a $2.50 stock before this. once they had competing offers, the stock went up to $3.20, $3.30. so if i get anything more on this throughout the day, i'll let you know. meantime, the stories over the weekend about boehner and the fiscal cliff. the good news is, do nothing is off the table. so now we'll either get a grand bargain or something that is at least the minimum necessary. there's a little something in between. a lot of people are passing around the senate bill that raises taxes on the wealthy over

$250,000, but also increases the taxes on certain classes to about 20% overall. that's very, very important overall. i'm talking about dividends and capital gains. there might be a compromise in between a grand bargain and just doing minimum necessary. i think that's where a lot of the negotiations are going. did you see asia? catching a bid all over the place. land slide victory for the conservatives in japan. you know what the conservatives stand for? unlimited easing stimulus. the new prime minister is back in again. increase defend spending. increase infrastructure spending in japan. that's why the asian markets were up overall. did you see what was going on in shanghai index? up another 0 .5%. finally, did you see the airline stocks? nice upgrade at a couple of the firms there, upgrading the airline indexes, moving the last several weeks on better news

overall. minimal impact from hurricane sandy. so they upgraded the airline stocks today. the coal stocks up, too, on talk over in barron's that coal would be in much higher demand over in china. guys, back to you. >> thank you, bob. >> let's go over to the bonds and dollars. how are you? >> good morning, jim. well, interest rates, once again, have trickled a bit higher. if you look at it in the context where we've been, basically held the bottom of the range. the pivot, 1.60. we talked quite a bit about how 160 was an important level. we have built on that as we've distanced ourselves, a dozen bases points above it. it's fascinating to look back towards europe. many hedge funds forsaking some of their short positions on the french fixed income market. and so their rates are moving a bit lower, as that buying comes in. but look at how the boon has such a different pattern.

still a lot of anxieties in the european sector. there's going to be a lot of protests in spain, for example, today. foreign exchange, if we look at the dollar/yen, we look how quantitative easing is going to be a much more enhanced program in japan after the elections. you can clearly see how the dollar has performed quite admirably against that weakening of the currency issue on quantitative easing. remember, for an export economy, this is not something they're so upset about. last, but not least, even our weakened partner in europe, we just discussed, look how the euro versus the dollar is at some of the best levels we've seen since early may. something to pay attention to. we also had empire index on the weak side. and minus 56 billion on october treasury, international capital flows. that's the weakest level since the summer of 2011. now we're going to go to david faber who's talking about a sprint clear wire deal. how clear is it, david? >> we did get the deal itself,

rick santelli. thank you very much. after a couple of months of which we've been talking about this. if you recall, back on october 10th, we got the deal this morning in terms of the special committee. clearwire allowing the company to be acquired by sprint. it is about a $2.2 billion equity purchase price to sprint. if you recall, owns roughly 50% or so of the company. as we pointed out so many times in discussing this, clearwire is as much, if not more, a debt story than an equity story. we start talking about this the day the soft bank deal with sprint was announced, or we reported on it. and clearwire shares ran up markedly every since then. as i told you back then and along the way, it was sprint's intention to acquire clearwire. they will point out to the unaffected stock price, the stock price clearwire had prior

to october 10th. why all this talk about price? you're going to hear a lot more about it. it is because they do need a majority of the minority shareholders, the shares not owned by sprint, to vote in favor of the transaction. now, they already have commitments from comcast, intel, they own about 13% of the voting shares. take out sprint's side of it and it ends up being 26% of that minority. so the hurdle's not that high for sprint and clearwire. they only have to get 25% of the other shareholders out there to vote in favor. judging from the conference call, the conversations i've had, the press release itself, they want the world to know, hey, this special committee did not shirk its duty. it took it quite seriously. it looked around, tried to see what else was out there in terms of value. it wants to remind you as well, this is a company with a lot of liquidity needs, a funding gap. and i think they even had blackstone listed for restructuring advice. >> restructuring meaning, we had

to take this thing into the distressed situation, even potentially bankruptcy. they raised $2 billion in debt over the last few years. they have limited access for new debt capital. substantial funding gap. restructuring is possible. all these things said in the conference call, because they are going to have a shareholder vote down the road. that's 90, 120 days away. we have a proxy yet to come. they want to set the stage and say, come on. they hired an investment bank to inspect an option in 2010. by the way, we got incredible proposal the last few weeks to potentially sell spectrum, but we concluded that was not any better. in fact, a bit worse. squishy is the term some were using with me to the sprint deal as well. so all those things cited as reasons why this special committee agreed to $2.97 a share. that, by the way, the ceiling on what soft bank, which does have the right here to say yes or no

to sprint, willing to go to the same price that was paid to eagle river. mccall started clearwire way back when. google got out way below these prices some time back. my guess is, they get it all done. it is a distressed situation in some ways. then the question will be, what does sprint do with it. >> the deal itself won't close immediately, so those who are paying north of this price may end up being hurt. >> they may. now, there's always hope when you get close to it, they may not have the vote, they'll bump a bit. we shall see in time. they're certainly making an endorsement of why they agreed to $2.97. and why an alternative is not one that shareholders should in any way save for. >> you saved viewers a lot of money. there. >> all right. i'll take it. >> all right. giant changing a recipe for a well-known soda. we'll tell you which one we're

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take a look at the dow. bank of america leading the way. this is a new 52-week high for bank of america. what a year bank of america has had. the stock at $10.74 right now, up by 1.5 points. ibm in terms of weighting on the dow is higher by one full percentage point, or two points here. >> meantime, a sweetener shakeup over at pepsi. diet pepsi is looking to invigorate its recipe by using a mix of two artificial sweeteners rather than just aspartame. it's to help preserve the taste. supposedly, guys, this is happening ahead of a big rebrand coming, that is still to come.

start messing with soda formulas, and you need to be very, very careful. >> it's been four weeks now since i've had a diet soda. >> really? are you going through withdrawal? >> as per my cardiologist. i miss them tremendously. i feel like i got addicted for a while. >> americans especially love the bubbly. is that before or after he asked you about apple, your cardiologist? >> no, he was not in apple. which is why i decided to stick with him and his advice. that is now the deciding factor. >> the litmus test. >> now that i recall, he had apple. i'm going to buy a whole case of dr. pepper today. >> speaking of apple, apple just turned lower. it had been trading higher. up marginally, up from the session so far, but now it is down just under $2 a share. contending with downgrade from citi, a number of price target reductions this morning. and then defended on the other side by the likes of morgan

stanley, as well as barclays. interesting stock move here. battleground. truly a battleground right now. >> at my old hedge fund, we used to talk about the battle of the psalm, where 60 british soldiers were killed that morning. you just don't know what's going to happen. i don't like the maxims. weight until 2013. >> meantime, the dow is up close to two-month highs here. despite the skepticism we went into december with, regarding policy. the market was the big point among some of the papers. >> i went through the charts this weekend, spending about five hours going through the hand charts. and it was just -- there were so many positive ones. i like the hard copy. >> since 1988. >> why not. it was a good deal. >> i had a lot of hair then. i was -- i was having a good time.

>> when we come back, jim cramer's thoughts, six stocks in 60 seconds. i love this show. 18th, five days later, i had a massive heart attack. bayer aspirin was the first thing the emts gave me. now, i'm on a bayer aspirin regimen. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. [ woman ] learn from my story.

final for "six in sixty," six sox in 60 seconds. we start with unilever. >> run by a guy who used to run proctor. i think the stock goes higher. late recognized by credit suisse. >> rbc making travelers a top pick. >> this group i mentioned the charts. this is an amazing chart. this is just total breakout. whether it be aflac, travelers, breakout mode. >> google. >> it's true that the ftc just a slap on the wrist, google is up and away. >> tractor supply, short-term buy. >> this stock has been horrendous since the storm. i think it works. >> cqp, signing a deal. >> this is incredible. people understand when you hear the natural gas being exported, there's only one company that

has the license to do it. these guys are signing up everybody. >> i skipped over -- >> all the perigo is a knockoff of the brands at the store. they just don't do well. >> talk to me about tonight. what's coming up? >> look, we're analyzing, we're talking about the way to make money off of apple, not acting well. and i think it's important to recognize that this has become two worlds. and the tech stocks that are not apple, their charts are so beautiful, carl. that i just find it breathtaking. we're also take a look at something that happened with hurricane sandy that has produced an actual boom in some part of the economy. you know, tragedy sometimes -- there are companies that do well when the gdp expands and there's a lot of money coming to the federal government to jersey and new york and it's having an impact. >> you have to watch the flow of

money, even as a result of tragedy. >> obama said obviously the governors wanted it. the governors have done a magnificent job of fighting for their states. we should keep it in front of us because it was horrendous. >> let's frame the atmosphere with regards to the cliff. on friday you were pretty critical. you said politicians don't understand, with small business you need traffic, right? >> it's the customer. you've got to get the customer in. you don't do a small -- you don't create small business having bought and -- trying to recreate an in. what matters is customers. believe me, i have partners who are very caring about the tax situation. we care about customers. if you give something that makes the customers more confident, every business does well. if you don't give us confidence, our customers pull back. and they pull back not because of taxes, they pull back because they're scared of what will happen. >> the wheels of negotiation are

moving. we don't know how quickly. >> as david tepper said, they could have a deal inning hours. should you get in now or will it continue to slide at $5.07? liesman's exclusive with jeff lacquer, who is at odds with his fellow fed policymakers. keep it right here. ♪ [ engine revs ] ♪ ♪ [ male announcer ] the mercedes-benz winter event is back, with the perfect vehicle that's just right for you, no matter which list you're on. [ santa ] ho, ho, ho, ho! [ male announcer ] lease a 2013 c250 for $349 a month at your local mercedes-benz dealer.

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welcome back to "squawk on the street." we'll start with the troubles in tech land. specifically, apple, falling below 500 pre-market. bouncing back and then falling again. citi downgrading shares to neutral. several other firms coming out in support of the tech titan. as the street takes sides, we dig deeper into how to play the dow trend. >> the favorite is back on the mcdonald's menu as of today, but will the seasonal sandwich save christmas and boost sales for

the fast-food chain. >> plus, liesman's exclusive with jeff lacquer. why he's at odds with chairman bernanke. that's at 10:30 eastern time. >> shares of apple after dipping below the key 500 mark after a downgrade from citigroup. citi going to a neutral from a buy rating. marshall, senior analyst at isi, great to have you with us. >> thanks, melissa. >> to be clear, you're sticking with your buy rating and $700 buy target, is that correct? >> that's correct. we actually thought the 2 million units in china over the first three-day weekend was very solid. that represents about a 1.5 penetration rate of the 3g subbase of the china unicom. that compares to the three-day rate in the u.s. markets. verizon, at&t, as well as sprint of only 1% penetration.

we saw a deeper penetration with china than the u.s. we think demand is very solid. >> all right. at the same time, brian, that doesn't move you to move any of your eps targets or anything like that. it can have a very deep penetration in the china market. there's no china mobile, but it doesn't move the needle at the end of the day. >> typically apple's been 15% to 20% -- or china has been 15% to 20% for apple's revenues. shipping in about 4.5 million iphones into that country. we think that's pretty phenomenal and think it's only going to get better when china mobile ram ups up the iphone 5. while we didn't raise our numbers today, we're still forecasting pretty solid growth, 48 million for the december quarter. we think fundamentals are not the issue here on apple. >> let's get to some of the arguments that were laid out by your cohorts over at citi. one of them is good, but not

great demand for the iphone 5. specifically they're citing competition from samsung. what we saw in the second quarter, when apple was out of the china market is it lost market share significantly in the second quarter. if it does launch and get the china mobile deal in the second half of 2013, have people already bought their galaxies and android phones out there, so that's a loss opportunity for them. >> the market obviously is very large. over 2 billion units globally for cell phones. obviously samsung is the top dog. they ship about twice as many smartphones every quarter than apple does currently. we think the market is big enough for multiple parties to win. if you look at it from a profit perspective, apple dominates the market share, the lion's share of taking the profits out of the cell phone space. we still that still has legs for a couple of years. we think pulling the trigger here on apple and selling is not the right move. valuation is cheap. we think there's a lot of catalysts ahead of us.

so i think things are moving in the right direction. >> the problem with the valuation argument, brian, is a lot of people say we could have made that valuation market when the stock was up at $700 a share, and now we're sitting at $507 and change. has sentiment in your view turned to the extreme opposite from when it was at $700? there's no way of modeling that in, the rapid and sharp change in sentiment on the stock. >> sure. the sentiment obviously is very negative. if you look at the technicals, extremely weak. 50 days below the 200 day. ten day headed straight down. you know, clearly from a mechanics perspective, apple probably has the most embedded capital gains in it. fiscal cliff issues and taxes rising, people want to sell that, take chips off the table. as the stock comes down almost every day, portfolio managers and analysts throw their hands up and say, i need to reduce my exposure here, just in prudence.

i think all that stuff is not related to the fundamentals. we think fundamentals are solid. the valuation ultimately will come back up in our view as people realize that things are better than what the stock is indicating today. i think we'll see multiple expansion going forward. >> brian, you talk about a china mobile deal like it's almost guaranteed, just a matter of timing. is there no risk that this never comes to pass? >> well, it's well delayed. if you look at it, people were expecting this deal 12 months ago. but i think the issues here are joint marketing costs as well as care and subsidy rates. you know, we think those issues are probably going to be ironed out. china mobile is over 700 million subscribers, the world's largest carrier. obviously apple is probably the best brand out there. so i think those two want to get together and do business. i think it would be good for both parties. >> if they don't, that's a problem? >> it would definitely be a negative. china mobile is not in our model currently in terms much numbers. so that would be an incremental

upside. if it doesn't happen, that would be an incremental negative. >> brian, we're going to leave it there. thanks for your time. brian marshall over at isi. >> thank you. >> there could be a break-through in the fiscal cliff negotiations. boehner asking for an equal amount of spending cuts in return. john harwood joins us this morning with the latest. listening to your comments on squawk with joe earlier this morning, you sound pretty encouraged here. >> yes. you know, i've been optimistic all along that we'd get a deal, but i said the other day that my optimism was being tested by the appearance of stalemate. you had a long period of time in which the speaker was not budging on the issue of tax rates. well, that break-through moment has occurred. that point of principal has been conceded, and that really is going to be the trigger for bargaining now. and you can see the administration starting to engage more significantly with john boehner, now that he's offered that -- made that offer

in a telephone call on friday afternoon. let's go over to the main components. first of all, he wants the rate to go up to 39.6 on million-dollar incomes only. however, the president wanted the top rate to go up on $250,000 incomes. boehner's offer is more limited than that. he's offering $1 trillion in new revenue over ten years. the president has been asking 1.4. so they're getting closer there. and john boehner also suggested putting off the fight over the debt limit, which is a big concession to the administration. now, the speaker's office has said, we are still going to insist as we have in the past on spending cuts, at least as large as the debt limit increase that we approve. but by delaying it on the calendar, that increases the possibility that we're going to get a deal sooner rather than later. don't know that it can be enacted before the cliff, but i think if confidence rises highly enough, carl, among both parties, you could see a brief punt to the early part of next

year when they could iron out the details. so this is a positive sign. if you want a deal on the fiscal cliff, you should be feeling better today, because it looks more promising right now. >> i don't hear you commenting as much as to whether the rank and file would follow suit. or does boehner have everybody's proxy? >> no, he does not have everybody's proxy. i think john boehner is stronger than he's ever been in the republican caucus. i think he can make this stick. there's no guarantee of that. but one of the things that you could have happen is that some democrats close to the administration have pushed this idea, that john boehner would put it on the floor, invite republicans to vote no if they want, knowing that he would get a sufficient number of republicans to go with democrats to pass it. so he's not going to get all of his caucus. he may not even get most of his caucus. but it appears john boehner's got enough confidence and freedom of movement within the caucus that he could propose this, get it passed, and keep his speakership.

>> interesting. things moving quickly here. john harward in washington here today. thanks a lot. the cheddar, bacon, onion sandwich that boosted sales for mcdonald's in december. >> steve liesman's exclusive interview with richmond fed president jeffrey lacquer. the lone dissenter at every fed policy meeting this year. more "squawk on the street" after this. the

. all right. if the sight of this sandwich makes your mouth water, then you are in luck. because the mcrib is back at mcdonald's today. but how much do limited time offers really impact on sales? we're here to break down the mcrib effect. ladies, great to have you with us. rachel, i'll start off with you. what sort of impact could we see potentially in the month of december? i read in the past, in 2010 at least, one of these limited introduction offers that it actually boosted sales by almost 5%. >> i think it depends on what the lto is and what the prior year same-store comparison is. i wouldn't expect to see a positive number of the magnitude that you're discussing. actually, frankly, it will probably be something in the single digit negatives. but at least it's a tried-and-true product they know customers will come in for.

>> nicole, if the mcrib is so loved, is that why it's always limited, a limited time offer? why don't they just put it on the menu? >> absolutely, it's one of the most anticipated product launches of the year. by to some degree it's tried and tested, but the best thing is to use what you know. they're going up against the most difficult comparison of the year at plus ten. we think a down low single digit would be good. if they could get the flat, it would be great. >> 26 grams much fat. if that doesn't want to make you run, i don't know what will. in addition to the mcrib, getting on the menu in december, we also have a lot of other products coming down the pike, as well as the grilled cheddar, bacon onion. do you think mcdonald's is getting back on track at this point? >> i think what they did in 2012 is hit on their core competency which is value. i think we saw wendy's and burger king, they were pushing

on premium. i think for 2013, they'll take a barbell approach to pricing, not just having the core value offerings, but trying to trade customers up in the u.s. with an increased number of ltos and new product offerings at higher price points which will drive not only traffic, but check as well. >> rachael had mentioned the tough december comparisoncompar nicole. is it time to step away from mcdonald's and go elsewhere as mcdonald's gets back on track? >> it's probably not a bad idea. in all honesty, the stock does factor in from a valuation perspective, the difficult december comparisons. but one of our favorite stocks, one of our top picks for 2013 is burger king. i believe they're taking a page from the mcdonald's playbook early on in this decade and basically filling in the gaps of their menu and improving their marketing and service, and basically taking market share. >> and i'm wondering, rachael,

in terms of mcdonald's and how it performed in november, it was a better than expected month of november. were they able to take market share? what accounted in your view for that boost in sales? i'm trying to understand the landscape if anybody at this point is starting to lose shares of mcdonald's as opposed to gain. >> mcdonald's continued to lose share in november despite the better number. i think they underperformed qsr sandwiches on a whole by a hundred basis points. which is where they had been performing. this is a setup for a 2013 story, where they should once again begin to take share as they introduce premium products and use their advertising scale, not just to drive traffic, but drive check as well. that's where we look for the main re version trade. >> i'm just curious, guys, do either of you know what the margin is on a mcrib? nicole, do you have any idea? is it better than any other sandwiches that they have? >> it's got to be very, very good. as long as they can combine

something with a product. because they do offer, you know, a value entry price point. the most critical point is getting you in the restaurant and getting you to actually step out and weight with two of them, not just one, then they can make money. >> we'll leave it there. thank you very much to you both. rachel rothman and nicole miller reagan. >> we'll send it back to hq for a market check. >> financials this morning, the top performing sector in the s&p in early trade today, we have a mixed bag as far as what types of companies those are. big banks like bank of america, citi, goldman sachs, and hartford financial which is an insurance company. let's take a look specifically at bank of america. that stock hitting a 52-week high. actually in just the last year, four bank of america stock, shares up 108%. we heard bullish comments on the housing recovery from ceo brian moynihan on friday.

>> thank you so much, kayla, over at headquarters. the tragedy of newtown, connecticut, a new dialogue about gun control in this country. a democrat from west virginia, a member of the nra, speaks to us next. don't go away. [ male announcer ] you are a business pro.

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in the coming weeks all use whatever power this office holds to engage my fellow citizens from lapd, to mental health professionals, to parents and educators in an effort aimed at preventing more tragedies like this. because what choice do we have. we can't accept events like this as routine. >> that was the president at the vigil in newtown, connecticut, last night, the elementary school shooting that left 26 dead. democratic senator from virginia is calling for a bipartisan conversation on reforming gun laws. senator mansion joins us this morning. good to have you with us. good morning. >> thank you, carl. good to be with you. >> this is a bit of a statement coming from you, obviously you've been endorsed by the nra,

used pictures of you holding guns in campaign material. can you walk us through the thought process that leads you to this conversation? >> carl, first of all, as a parent and as a grandparent, and the people of west virginia, our hearts go out -- i mean, i can only imagine -- i can't imagine the grief and pain that these family members, and this entire country is mourning right now. we're all hurting. with that being said, i am a proud member of the nra, and there's an awful lot of good quality people that are great members of the nra for the right reason, to protect the second amendment. we're not talking about infringing on the second amendment rights at all. what we're talking about is having not only dialogue, but movement towards the types of weapons that you're seeing being used. and it has changed me. it's changed me, that when we saw young innocent children slaughtered, if you will, just unbelievable, incomprehensible. and i think we shouldn't be ville nizing any group

organization or -- we should be bringing people together, how do we move forward as a civilized society. >> right. >> and one who basically are responsible for protecting our children. >> senator, i know it's early stages and hard to discuss specifics, but what do you think you are reasonably equipped to consider? is this about assault -- i'm sorry, go ahead. >> the assault weapons, i think basically, dianne feinstein wants to discuss it. the culture in west virginia is hunting and sporting, and we love it, it's part of who we are. but we're taught at a very young age how to do it responsibly and use them safely for the purpose of hunting and sporting. with that being said, i've never been hunting with anyone with an assault weapon. i've never been hunting with someone with multiple clips with 20, 30 rounds in it. in deer hunting, we maybe have three shells in our gun, and that's the sport of what we do.

and i just think that when you have chuck schumer, my friend chuck schumer basically saying we should look at these larger clips, those are things we should be talking about. when you have joe lieberman, just the most decent human being, saying, listen, we need to have -- this is bigger. it's about mental illness. it's about keeping our children safe in schools. one of the basic promises we should keep to our children, every child should have a safe place. it might not always be the home. but it's always usually been the school. now that's even taken off. just unbelievable. >> agreed here, senator. the nra themselves have been relatively quiet on the issue. they've deactivated their facebook page. have they spoken to you, and what do you think their response would be to a feinstein bill if it got support? >> we're the nra, i have reached out and spoken to them. i intend to do an awful lot more. i want them engaged in this dialogue. these are good people.

and they need to be at the table. and bottom line is, what we're asking is for all of us to come together and see reasonable approaches we can take. still protecting the second amendment rights. that's their concern. and my concern also. and again, they don't need to be ville nized, nor should they be. they're going to be a strong participant and they should be at the table. i'm going to do everything i can to make sure they are. >> senator, we had a ban on assault weapons in this country that expired in 2004. it's the early days, but to the extent there is any momentum reinstating such a ban, do you think it has a realistic chance of passing the house and senate? >> carl, i would think this is a reasonable approach to taking and looking at, you know, it was on for ten years. looking statistically how it was able to protect the citizens of this country. is it capable of doing that again? i believe it's a discussion. and it's worth elevating it to that level to where all of us

are looking at it. we've never been in these waters before. we've had horrific crimes throughout our country. but never have we seen so many of our babies put in harm's way. and their life taken from them. and the grief -- i mean, that's changed me. and it's changed most americans, i would think. and with that, let's look at ways we can bring a common-sense reasonableability to this discussion and bringing all the adults to the table. >> senator, when thinking about a new potential ban. what could that look like? i'm asking, because that federal ban that david had mentioned, that expired in 2004, there are ways of manufacturers were able to get around that ban by making small tweaks to the weapons, but essentially keeping them assault weapons, for all intents and purposes. what sort of specifics are you going to get into? >> i think we need to look at everything. i think dianne feinstein has had a bill, she's bringing that to

the floor. i'm anxious to sit and talk to her, and senator schumer and senator lieberman to find out how we can collectively come together as americans to protect our children. that's really what this is about. it's changed the level of discussions. >> senator, before we let you go, do you agree that this could potentially cost you politically? and does that matter to you at all at this point? >> i don't think that -- you know, if people start thinking about politics in this time, there's a time, i guess, for everything. but when you have children, and we see -- i can only imagine as a parent and grandparent, carl, the grief, the pain. and i just don't think we should ever put one child in harm's way. and if we can prevent that, we should. and i'm willing to, i guess, face whatever would come. but the bottom line is, i think that we can elevate that, protect the second right,

amendments of the second amendment. i think we can do this in an intelligent manner, and that's what i intend to be part of. >> joe manchin from west virginia, thank you for your time. >> thank you, carl. >> let's take a closer look at gun sales, trends both before and after the election of president obama for a second time and recent tragedies. mary? >> david, whether or not any change happens with regards to gun laugs, president obama has been good for the gun industry, largely because he's been seen as being bad for it. the newtown shooting will probably spike gun permits. in truth, the gun industry has been growing for the past few years. a presentation this month, smith-ansmith and wesson on track to exceed last year's total of 2.7 billion. a powerful motivator for gun

owners, nra telling members in october a sweeping gun ban would be a near certainty in obama's second term. it's not the first time that's happened. 1994 marked the prior peak in u.s. gun manufacturing, the expired ban on assault rifles went into effect. the increase to the rush to make and buy these weapons prior to the ban. rising market lead low since 2008, when obama was elected. in fact, background checks by the fbi set a monthly record of over 1.5 million last month and marked the 30th straight check in gun applications. largest single day, black friday. checks don't always translate into sales, but certainly reflect interesting guns. the guns at smith & wesson. the stocks like gun sales showing upward trend over the past few years. a trend smith & wesson seeing

continuing. 35% to 38% increase in sales over last year. >> thank you very much, mary thompson. a mover in the software solutions space. let's get over to kayla for that. >> the company's ticker is ctwr. two activists in it as of last month, one of them elliott associates just making an offer to buy the company at $11 a share. a big spike in the stock. it was previously halted. we'll wait for the company's response at this point. >> he was the lone dissenter at last week's fed meeting. in an exclusive, steve liesman will ask jeffrey lacquer about the new economic thresholds. look, if you have copd like me,

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last week's fed meeting seeing a lone dissenting vote, courtesy of jeffrey lacquer. so what does lacker think we should do now when it comes to the economy. steve liesman is now joined by jeffrey lacker. steve, take it away. >> david, thanks very much. i'm here with jeff lacker, the lone dissenter in the last fed meeting. i think you dissented all year long. >> true. >> let's get into the reason why you dissented. in the past you dissented on the

purchases. this time there was a new aspect to the statement. you dissented on the issue of the economic targets. what's wrong with 6.5% unemployment and 2.5%? >> i was happy to get rid of the calendar date. i thought it was flawed, created awkward problems for us when the time came to adjust it one way or another. i was happy to get rid of that. i agreed to that part of the committee's decision. i think that setting a numerical threshold for unemployment, i would have preferred a qualitative approach to describing conditions under which we'd -- we're likely to start raising rates. numerical threshold for unemployment is risky for a couple of reasons. first, because no one's statistic can really capture everything we think is going on in the labor market. the unemployment rate can fall for bad reasons. it can stay high even though the labor market is improving dramatically. >> the chairman did make it pretty clear, as did the statement, that they're going to be looking at more than just the

unemployment rate. >> that's true. but what do you need the threshold for. the danger is people become fixated on it. as we said in the january statement on the longer run goals and policy strategies, it's inappropriate for the central bank to set a target for the unemployment rate, or for a labor market. because that's determined by things that are largely outside the control of the central bank. central banks can influence labor market conditions, but those influences tend to be transitory, and not sizeable. in this case, i don't think we can have a huge effect on labor market outcomes over the next couple of years. >> what kind of negative results do you expect from this? how are people misinterpreting it? >> i think the risk is that we become -- people become fixated on it. it becomes an interference in our communication, a distraction from our communication. down the road it has the potential to set up a problematic sort of tension

between two commitments. we have a commitment to price stability, and now we have this commitment, or implied commitment to 6.5%, to keeping interests lower until we get to 6.5%. the question is, what happens if incipient inflation were to rise before we get down to 6.5%, would that set up a quandary. in all fairness to the committee, there's this inflation safety clause that says, we're going to keep interest rates low unless we get to 6.5%, but also as long as inflation is expected to be within a half a percentage point of our 2% goal and inflation expectations remain stable, but the historical episodes we've had in which inflation pressures have emerged, inflations accelerated, all had the property that private and central bank forecasters expected inflation to fall. and so we might not trip that threshold. >> until it's too late. >> until it's too late. >> i think there's more of a

basic question on the minds of the market watchers right now. is a 6.5% unemployment target, easing monetary policy, the market certainly acted, or reacted as if that was a hawkish move, or tighter policy. >> the sentence right after the one that contained the number 6.5% made clear that the committee used this as a clean slate. in the one period, the one statement overlap, we view this as consistent with the mid-2015 language. going forward, you can decide for yourself what the date is likely to be. that should change with economic conditions one way or another. >> i can decide for myself or i can ask you, when is 6.5% unemployment? >> you can look to our forecast, which we publish once a quarter. trace out there when the committee as a whole views it as likely that we get to 6.5%.

and that would be the beginning of the time period at which consistent with the statement you would expect the committee to start raising rates. >> when is that? >> i think three years. i see unemployment coming down to the low 7s sometime next year, or sometime after next year, 2014 or so. and it could take a while to get down to 6.5%. >> i'm pretty thoroughly confused about the reactions. if you're going to be half a point above the target, you're going to stay wide open at 0% interest rates even though you're just a half a point above the target? >> it should be clear from the way we worded this, that 2% is our goal. >> 2% inflation. but i mean half a point above unemployment. >> oh. >> you're going to stay down to -- you're going to be a half a point above the unemployment target and still going to be at

zero. is there any reaction function in there? or is 6.5% a trip point? >> the sentence after the one that had 6.5% in it, the rest of the paragraph makes clear we're going to look at wide array of market indicators. i think it's with what's happening in the labor markets. and decide accordingly. >> i've got to press you on this. if you're telling me you're going to be at 6.9%, and still a zero funds rate, is that your point, that it doesn't change until then? or how does that work? >> well, markets have got to parse this language where we've got the 6.5% in there, and later on in the paragraph there's a range of other conditions that we're also going to look at. so there is that escape clause later in that paragraph. >> do you think we've gotten less confusing here, or more confusing? >> well, it should be pretty clear that this committee is

straining to provide as much stimulus as possible, without endangering our price stability credibility. my worry, and the reason i dissented on this, and the asset purchases, is that we seem to be willing to test the very limits of that credibility. and when you make a test, sometimes it doesn't come out right. >> let me ask you about your economic outlook. we're doing 2% economic growth. what's your forecast? >> 2% is my forecast actually. that's what i wrote down for 2013. i think we have a good chance of picking up after that. if we've done 2.5, 2.25, rather, since the beginning of the recovery, we've been a little softer this year for various reasons. anticipation of the cliff, some other sources of uncertainty are keeping us at a low rate of growth. i don't see those dissipating very rapidly next year. and i think the headwinds are going to be with us for some

time. >> what about inflation, you've been concerned about it for a while and it hasn't come to pass. what's your forecast for next year and do you think maybe you should revisit your inflation framework? >> i think inflation will come in a little under 2%. i put in 2.8% for 2013. i think it's impressive that we've achieved exactly 2% during this recovery, given all that we've gone through, given the potential for us -- for people to question our credibility, given what we've done with the balance sheet. having said that, i've never thought that the major inflation risk was during this time of, kind of low growth that we're seeing. it's always struck me that the time, when inflation risks would be most present are times when the growth rate picks up, and with the huge amount of reserves on bank balance sheets, they start seeing more lending opportunities to businesses and consumers. they take advantage of those, trying to all convert their

reserves to loans. and we don't reduce the quantity of reserves. the only thing that can give is loans and deposits. and that creates a potential of inflationary pressures, because of the expansion of the monetary assets in the economy. that's always been the fear i've had. so it's not next year's inflation that i'm worried about. it's when the economy picks up more substantially. and we obviously have to take interest rates up. the fear is that with a large balance sheet, we become much more vulnerable to small errors. i think in principle, we can raise rates rapidly enough in principle. and we can sell off assets rapidly enough in principle. the question is, how to do so, and are we going to correct course in time, and are we vulnerable to large mistakes. >> jeff, appreciate your explaining your views on your dissent at the fomc. jeff lacker.

melissa, back to you. >> thank you very much, steve, for that exclusive. let's look at this chart here. you don't have to adjust your tv sets, you're actually seeing that correctly. research in motion, handily outperforming apple over the past three months. what does this mean for your investing strategy. apple versus rimm later on in the show. ally bank. why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me

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get to the cme group. rick santelli this morning. good morning, rick. >> good morning, carl. it's a tune we've heard many times. and i actually liked playing around with the debt clock. of course, many of you viewers probably look at it as often as i do. i'm done talking about taxes. i want to talk about the big guy in the room. these numbers continue to amaze me. and i'm just talking about the, quote end quote, superficial debt, not the underfunded liabilities. but the numbers are staggering. in the year 2000, we had $5.6 trillion of debt.

you can see what happens. in '08, $10.6. currently we're bumping against the debt ceiling right now. a little over $16 trillion. the estimates are that by 2016, we're going to have $22.8 trillion. get used to it, because obviously as the discussion moves towards the debt ceiling, as well it should, that's the number we're going to be referencing the most. let's consider some of the stories of late. the rating agencies haven't necessarily weighed in on the fiscal cliff issues. because as perverted as it may sound, i'm sure many of you have listened to howard dean or greenspan, they believe the rating agencies must think along the same lines. no matter how horrible or haphazard or sequestered spending cuts can be, the rating agencies, and some prominent economic people in the economic community, believe that is a start. i don't necessarily. but many governors have been on this show. we had mark warner.

they talked about, well, as a state governor, i think the debt ceiling games are crazy. well, for the most part, other than vermont, all states have some form of a balanced budget. they might not call it that way, and games can be played. but for the most part states try to close up the books every year. maybe if the president doesn't want a limit on the debt ceiling, which i think would be a mistake, he's the president, he's not the king, maybe we should swap. maybe the effective is you don't want no debt ceiling, if we put forth a balanced budget amendment, we could get there. there's also another thing i notice on that debt clock i like to play around with. you can see, for example, how many taxpayers there are. you can also see how many retirees there are. the retiree category includes people with disabilities. but as one final thought. when you look at the percentage of retirees as a function of taxpayers in 2000, it was about 42%. right now, it's about 60%.

so when we look at the debt, and then we look at how we pay our bills, and who taxpayers are, this dynamic along with number really need to be thought of quite seriously. whether you raise taxes, whether you groe the economy, i guess one of the problems is, we have to have a bigger percentage of people working, or a bigger revenue stream to pay for the demographic time bomb that was warned many decades ago that we happen to be in the midst of right now. carl, back to you. >> rick, we'll see you in a few moments with your guest. don't go too far. >> you heard from kayla back at hq, news there. elliott management making $$11 share offer. $20 billion fund management company. has been a very strong activist. you may recall bmc software company.

also a number of years ago, it succeeded evest eventually. the offer is subject to due diligence, subject to them finding financing. they have had conversations about that. we'll see what compuware. they'll see whether there are potential buyers out there for compuware. it is having the effect of sending the stock price not quite to, but close to that $11 a share cash offer, which they point out is a 21% premium over the company's 30-year volume weight average price. >> busy man over on that side of the table. meantime, up next, proof that success can come in small packages. how birch box is raising millions of dollars in funding.

the company's founders will join us at post 9 right after this us at post 9 right after this break. [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. you can stay in and like something... or you can get out there and actually like something. the lexus december to remember sales event is on. this is the pursuit of perfection. the lexus december to remember sales event is on. ...so as you can see, geico's customer satisfaction is at 97%. mmmm tasty. and cut! very good. people are always asking me how we make these geico adverts.

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special delivery, it's beauty by mail. each month birchbox members

receive a box of luxury beauty items. a delivery of exciting products that help their day-to-day routine. this isn't just for ladies, either. birchbox men launched in the spring. it's the convenient place to get the latest beauty bootie, and stay in vogue. ♪ baby you light up my world ♪ >> haley barna and katia beauchamp are the co-founders birchbox and join us live. you pay for a subscription. how do you get the suppliers to give you these products? are you paying for them in any way? what's the cost on your side? >> basically suppliers have been giving samples, getting customers to try the pukt for ever. birchbox is the first way where they can track the roi and get the samples in somebody's hands in a targeted way. they're excited to get them to us in kind of a marketing expense but we're also retailing those products. we're a marketing partner and a retail partner. >> if i get a sample of a

foundation or carl does -- >> i've tried them all. >> and he likes it, you go onto the site and actually buy it from you, or do you put it through to the actual manufacturer of that? >> try, learn, and buy. the print model. we send monthly boxes of customized samples. we have editorial content teaching you how to use that foundation, but we also sell the full-size version. it's a complete 360 from discovery to purchase. >> you have warehouses where you keep this product on the inventory side? >> yes. >> it's totally aligns with our partners. we want to send that sample to the right customers who's most likely to buy it. >> what is the return on investment? let's say you're a company and giving away samples of foundation to you guys. what can i expect? >> there are a lot of things we do with partners. we put together a full-fledged campaign. if you think of a brand, you're launching a product, you spend so much money to get a customer to walk up to your display. birchbox gets the product right in her home and then we create a campaign that's editorial,

social media, and it's also marketing, in her inbox, in her e-mail, and we make it so easy for her to buy. that's the idea, you're already a subscriber, you can click and buy. >> the two of you met at hbs as you've seen on the screen. almost a million in venture funding. capital easy to come by these days? >> it's doing very well. >> we've reached two rounds. a speed round in 2010 and series-a of 10.5 in 2011. to be honest it was sort of tough telling venture capitalists about a beauty prescription company at first. then when we got significant traction, we were able to get great investors behind the concept. >> when do you need to do another round? >> we're in a great place because our business model is very clear revenue. on the other side. so that's wonderful. but if we decide we're going to go faster we'll be looking at raising money again. nothing in the immediate future. >> you guys are global. you do a fair amount of business in europe. environment there getting easier, tougher, the same? >> we actually launched birchbox in 2008 in a tough environment in the u.s.

so even though the environment there, people know it's a little bit shaky, we're still relatively small business though. we're not being impacted at this stage. we are in the france, uk and spain and all of our businesses are growing in each market. we're hiring in all of those markets. anybody who wants to know. >> have you changed the mix of samples depending on the economic environment? for instance in 2008 did you have maybe a lower end price point product as well as a higher end or no? >> that's one thing about the beauty industry, trends are always changing. it's an accessible luxury. you've heard of the lipstick effect. when the company goes down people want to treat themselves. one thing we've seen this year is male trends. nail polish, nail art. >> carl loves nail polish. he just loves it. >> what are all those people who give out samples in department stores going to do when you put them out of business? >> they're doing something different. department store sampling and sampling in stores is a loyalty moment. it's not a great thing to do for customer acquisition. you still have to get a customer to walk up to you. we're doing something really

different. it's customer acquisition and it's in a very targeted and smart way. >> katia, hayley, thanks so much for coming by. >> thank you. >> speaking of retail, holiday shoppers, you have unbelievable one week left before christmas. so which retailers are set to see the biggest gains this final week ahead of the holidays? we'll name a couple of the names when we come right back. bob, these projections... they're... optimistic.

productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.

a decent size gain on the back of what david tepper said this morning and a lot more. you got a lot to talk about tonight. >> looks like apple is carrying its losses beyond that trade. we'll also give you the four tech stocks that are better than apple. and that -- >> better than apple? the 496 stocks in addition to that. >> the top three tech stocks for 2013 at least. >> see you tomorrow, carl. >> in case you're just tuning in, here's what you missed earlier this morning. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> if we get to january 1st we'll have the biggest tax increase in history, and the president can turn around on january 2nd and propose the biggest tax decrease in history for everybody under, and you pick the number. >> i would just beg, you know,

it's like you want to beg these guys in d.c. to do something. to help this country just get to where it was. get people to work. they can do it. they really can. >> i went to a doctor this morning, and apple didn't come up and i was thinking, hey, could be closer to -- >> it did not come up. this is the first thought that didn't come up, tempted to go to the dentist just to get a dentist check. get an opinion on how many people are worried about apple. >> grover has said point blank that you're finished if you vote for a tax increase. and grover so far has been much more powerful than boehner. like the shadow governor of the republican party. everyone knows that conference call that grover runs keeps everybody in line. >> when do you think we're going to get to 6.5? >> i think it will take three years. >> really? i think it will take awhile. i see unemployment coming down to the low 70s, sometime next year. or sometime after next year, 2015 or so.

>> good monday morning, we're live here at post nine at the new york stock exchange. let's get a check on the markets this morning. the dow hanging onto a pretty good gain up 48 points. s&p up about 7.5. nasdaq up 12. a lot of things at work here this morning. sprint, for instance, winning over the clearwire board with a sweetened $2.97 a share takeover bid. sprint now offering $2.2 billion to buy the portion of clearwire it doesn't already own. the new offer was approved by japan's softbank and has the backing of clearwire's objectives like comcast and intel. after the company reduced inclusions of infringing products. so let's get to the road map 'tis morning. something you can't say very often, rim is beating apple, at least in stock performance over the last few months. is that a trend that's going to continue? we'll consult the charts.

plus shoppers beware, there's only one week of shopping left until christmas. we'll find out which retailers are set to gain the most this week, and which ones have the most to lose. then it's a big week for earnings. fedex, rim, just a few of the companies reporting. we've got a preview of which one might be discreet and which ones may disappoint. and from $300 shoes to $10 pajama pants. iconic brands covers it all. the company's president and ceo will join us live to give us his take on holiday retail. the two tech companies apple taking a tumble, while rim enjoys a boost, up more than 90% in the same three months. dan fitzpatrick is a technical analyst and president of stock market mentor dotcom. good morning. >> nice to see you. >> let's talk about what happens if it bounces. right? and the sort of trading range that that sets up post the bounce on apple. what is it? >> well, here's the thing, tom. 500 is a really, really key

inflection point. a lot of traders are looking at that. and that's what makes it so important. if we get a bounce off of 500, if we get a bounce off of 500, we can go in a trading range from between 500 and 600 points. but if we fall below, if apple falls below 500, watch volume. volume's going to be very important. because what we're setting up is, a head and shoulder pattern. now that's not bearish yet. but if apple falls below 500, carl, we're definitely going to get more downside. and it could be pretty substantial. >> let's define substantial. if it backs -- the volume tell us anything on that? >> yeah, they do. this is just a pure, measured move. please stop the hate mail. apple could fall down to $310. it sounds like a pretty substantial move. but when you consider the fact that apple has gone up, even if it at $300 now, it would be the

13th best performer on the s&p since the 2009 low. so, if you just take a measured move from the neckline, which i think you can see that on the chart, it's a line connecting two support levels, if you just take that, if you extend it downward, we get 190-point drop from 500 bucks. and so what i would suggest, though, is don't look so much at the target, just look at the fact that there could be substantial downside in apple, so i don't think it dips below 500 is a buy the dip situation. >> right. before we move on to rim, dan, what is magic about 500 and apple? why 500? >> well, for one thing, it's just a key point. traders like even numbers. >> sure. >> i don't know why. a lot of folks say i'll buy 500. few say i'll buy at 509. but also, 500 is just a simple kex of the last two lows. the lows in between that left shoulder and the head. and the head, and the right shoulder. it's just really interesting that that now intersects 500.

and so that's what everybody's looking at. not so much that it's an even number, just that where technical support is. most traders particularly on apple are trading this very, very technically. it's not a fundamental story anymore. everybody knows it's cheap. let's move on to rim. 120%. in less than three months but it sounds like you're telling people be careful. >> yeah. i think, look, if you're buying rim today, guess what? you're late. all the smart money is already bought. that's what called the big parabolic move. right now research in motion is up 50% above the 50-day moving average. now, a lot of stocks will get that overbought, but research in motion has really gone parabolic and so it's very, very overbought, and you have to look at the potential catalysts. earnings on thursday after the market closes. given the rise that research in motion has seen over the past, you know, ten weeks or so, what

possible catalyst could there be to bring in more buying? short interest isn't that high so you're not going to get a short squeeze. so it's really just a simple case of what's the most dominant group of players in the stock right now? what's the most dominant group? potential buyers, or potential sellers? all those potential buyers have bought, once you own a stock you can only do one thing. and that's sell it. we've got a big overhang at $15. i think you've got to get out of this stock. even if you get in after earnings, this is a very, very risky stock to be holding right now. >> you better not stick around for long? >> well, full disclosure, i'm short research in motion. i'm looking for a pullback to 12, maybe 10. but again, the thing is, what is the point of buying research in motion now? how good to earnings have to be for traders to continue to pile in to the stock? it's just the news is already

baked in. maybe the blackberry 10 is going to be really well received. but that's in january. right now we have to look at earnings. >> yeah. it has been, the world has been upside down on those two names for a long time. >> yeah. buy the anticipation, tell the news. that's what we got here. >> dan, thanks so much. >> thanks, carl. >> dan fitzpatrick, stock market analyst. over to hq for a market flash. kayla, i know you enjoyed that first flash segment. >> i did, carl. good morning. unfortunately i tweeted that i got a subscription for my roommate, i forgot she follows me on twitter. happy birthday. we're watching shares of caribou, agreed to be taken private for $16 a share. stock up about 30% today. the agreement says that it will be continued to be run as an independent company but the big question here is whether it would be combined with the german private equity house that is actually buying pit also bought peace coffee for about $1 billion five months ago. big question about more consolidation in the coffee

industry. >> kayla tausche back at hq. there could be a major move on the fiscal cliff negotiations. the speaker of the house john boehner offering the white house higher rates on top earners and other measures totalling about $1 trillion in new revenue. he's asking for an equal amount in return. our eamon jaffrays is in washington. >> just when we thought we had no progress at all from that mystery meeting last week between speaker boehner and president obama over at the white house we learned there was a phone call on friday in which boehner made this new offer to the president, let me walk you through the specifics of boehner's offer, starting as you say with raising tax rates on those who have incomes above $1 million. they're proposing overall about $1 trillion in new tax revenue. and they'd like to extend the republicans would the debt ceiling, but only in exchange for what they're calling substantial spending cuts and reforms. they'd like a one for one ratio on the spending cuts in order to extend the debt ceiling.

take a look at how that compares to where barack obama has stood so far. he's saying he wants to raise tax rates at above 250,000 in income and he's looking for $1.4 trillion in new tax revenue. that's about 0.4 trillion higher than the speaker as of right now. and he's looking for a near permanent extension of the debt ceiling. he'd like to get rid of that problem altogether. so, right there, carl, you can get a sense that they're not all that far apart. there is still some distance to be bridged here. if you talk to people in washington today, as i've been doing, they don't get a sense that a deal is imminent, you know, in the next 24 to 48 hours but we are definitely inching that way in this new offer from speaker boehner is encouraging to those who would like to see a deal here, carl. >> eamon just mechanically say they came out arm in arm so to speak in the next few days. could the wheels get something on paper in time for us to get this done before year end? >> they might be able to get it done before year end or what they might be able to do is sort of codify a deal, announce it publicly, have both sides, as

you say, arm in arm, although that's rare there washington, to say the least. but to come out and announce the deal, codify it in some kind of writing and actually process it after the new congress comes back, after the first of the year. so there's a way to do this that doesn't necessarily involve passing legislation by december 31st. >> all right. it will be fascinating if the market, which has been gently anticipating this all month long, eamon if it turned out to be right. we'll see, still early days. eamon javers in washington. holiday shoppers just one week left of shopping before christmas. when we come back we're going to find out which retailers may be set to benefit the most this week. we'll name some names. first rick santelli is working for something a little later on. >> absolutely. in about 15 to 20 minutes my guest is going to be peter shift. you all know peter shift. he's pretty hard on the fed. we're going to talk to about the historic changes at the fed. remember the word historic can be used but it isn't always a

good word. we have historic debt. that isn't a good thing. let's see what peter shift thinks about a 4 billion potential, i'm sorry, 4 trillion potential. bottom of the hour. [ male announcer ] you are a business pro. executor of efficiency. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national. because only national lets you choose any car in the aisle...and go. you can even take a full-size or above,

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biggest boost in the home stretc stretch? joe feldman and roxanne myers, good to have both of you with us. >> good morning. >> joe, i'll start things with you. i didn't realize 40% of sales are in the ten days prior to the holiday itself. you think they're going to be very clear winners, both in discounters, and apparel? walk us through it. >> that's right. yeah, now is critical for the retailers. as you mention, 40% of sales happen now. we think that, you know, walmart is still going to have a good holiday season. i think costco is going to come in down the home stretch. some of the big box discounters. target is also going to have some good sales ahead. this weekend, started off a little slow. it's good that we have next weekend with another saturday in there to really help drive some sales. but people still looking for electronics and other fun items. >> yeah. roxanne, you make the point that december, whether it was the weather or who knows what, started out a little shouldish, right? >> mm-hmm, absolutely. warm weather early in the month,

plus we had the traditional lull following black friday weekend. probably started off december a bit slow. categories like outer wear were particularly sluggish. for specialty retailers, outer wear is a small component of the total, and we think sweaters which are the must-have item are actually fairly strong. as the weeks have progressed we've actually seen rational promotional levels on balance and we don't think the panic button has been hit just yet. >> you make the point some of the less promotional things, old navy obviously part of gap, anf, an taylor, more professional gap itself, loft -- discounted about 40%, right? >> that's right. i think it's interesting that the average discount of 40% is actually flat to black friday. so at this point you're actually not getting a better deal but you're not getting a worse deal, either. >> teen retailers, you think american eagle, best positioned. why? >> i think they're just done a

terrific job with their assortment. the fashion is right. they're targeting a much more sophisticated, older customer within the teen niche and they're executing really well. on abercrombie i think it really comes down to a question of comparisons. for last year, it was really just a bloodbath in terms of promoti promotional levels. >> joe, roxanne is talking a lot about the level of promotion. does part of that lead you to your discounter thesis? why do you think they're going to do so well this final week. >> i just think that that's where the average american needs to shop, and this one stop shopping. great prices. good deals across the spectrum of general merchandise. a lot of customers through the store anyway. food, i think that they do a good job having the key hit items. if you look, you know, costco as an example has been sending out every day, you know, a deal of the day. and they're up to 24 now, and probably six or seven of them have just sold out, plain and simple. they're already done. so i think that they find key

items and they do a good job with that. walmart specifically mentioned that to us, as well. >> anybody who's been to a costco knows that a lot of times you go and what was there last time isn't there this time. joe, lulu in terms of large cap picks, you like it with minimal inventory, right? >> lulu is set up really well. it's still an indemand item. there's not a ton of discounting that goes on. dana is a huge fan of it. it's still one we like very much. >> roxanne what about let's say we get through this week, the following week, dwi2013, are na starting to pop on your screen automatically? >> yeah, i would throw out lulu. we think they're one of the premiere growth companies. really holding onto their market share and growing it at a terrific rate. ann taylor is being set up very well. they have new leadership earlier this year. there's a lot of catalysts that are going to play out. and the multichannel model is going to continue to be a big

theme into 2013. ann's primed to take advantage of that as well as urban outfitters. so we'll be looking at that. >> interesting. and joe, last comment to you. what is next year's depth, so to speak? >> bed, bath and beyond has not been acting all that well. i think they could have a decent year next year. home furnishings have been solid. a good, quality company with moderate growth ahead of it. excellent well-run company and generate a lot of free cash flow. >> if the sector gets anywhere near the amount of attention it got this year we're in for another wild ride. roxanne, joe, thank you very much. >> thank you. >> when we come back, all of these companies set to report earnings this week alone. question is, who should you bet on? we'll get a preview, tell you how you should play all the earnings action when "squawk on the street" comes right back. [ male announcer ] it's that time of year again. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to.

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welcome back to "squawk on the street" i'm kayla tausche with a market flash. shares of harley-davidson ticking up intraday on the back of a note from web bush securities saying that retail sales acceleration is a bit better than expected. that's leading the stock up nearly 2% intraday. >> all right, kayla, thank you very much. rick santelli in chicago talking the fed and unemployment with peter shipp. >> well, first of all we'd like to welcome a pretty famous economist, author and currently ceo of euro pacific partners peter shipp. welcome to the show, peter. >> thanks for having me on, rick. always a pleasure. >> all right. let's start out with unemployment. just generically do you believe that we have a structural unemployment problem, meaning that it's stubbornly high above and beyond the labor force participation rate influences and do you think it will remain stubbornly high in a real way, not it can be lower but people aren't really getting jobs sort of way?

>> i think it is structural. and i think it's the government that structured it this way. the fed with cheap money, the government with our tax code and all the regulations. we have too many people consuming, not enough people producing. we don't have enough labor in manufacturing like we should. the government makes it too easy for people not to wrk, by giving them viable alternatives. so we've created a situation where people aren't going to work, and we're going to continue to rely on the jobs abroad as we hemorrhage red ink and the fed keeps printing money to finance our trade deficits and eventually, and i'm not talking about in the distance future, sometime soon this whole artificial economy is going to implode. >> all right. now in that context, in that context, we can clearly see what you believe. what do you think about the fed targeting or making a goalpost the unemployment rate? >> well, the fed is constructing these goalposts, so it never actually hits them. the fed isn't going to tighten. i started saying this, when the fed first started talking about

an exit strategy back in 2009, i started saying there was no exit strategy, that the fed had checked in to the roach motel of monetary policy. there is no way for the fed to exit. all it has to do is make excuses as to why it's not. the fed is going to keep printing money until the dollar implodes and the economy collapses. because if they try to exit -- >> let me interpret you there. >> yeah. >> i somewhat agree with you. but the problem is, it's very hard to get a gps on how ugly the dollar is. because, of course, it only could be relatively valued against something else. and fortunate or unfortunate, the main bench marks that most people look at are the yen, and the euro. and of course, both the countries or group of countries on europe, the country on the end, they have their own issues regarding quantitative easing, so how am i supposed to look at the dollar, how is the average family going to feel this in the near term? >> yeah, i guess it would be like a student who brings home an "f" saying well, look there's

another guy that got an f-minus" so i'm not doing so bad. the dollar is going down against the euro. look at the british pound. it's almost at a 52-week high today. we're going down against the pound. but look at the aussie dollar. look at the new zealand dollar hitting 52-week highs. you could have bought the new zealand dollar for half of what it is right now five years ago. look at the price of gold. look at oil prices. look at food prices. ben bernanke said that he doesn't care how high oil prices go, how high food prices go, he's going to look beyond that to the value of falling prices that reside somewhere in his fantasyland. >> let me interrupt you again, peter. we're running out of time. i read your last newsletter, and you seemed to key on the same line i did. during the press conference somebody brought up monetization and mr. bernanke seemed a little put off, saying something along the lines i'm paraphrasing like i've already addressed that we're not monetizing. first of all, peter, define

quickly what you think monetizing is and tell me why you believe ben bernanke is monetizing? >> well, monetizing is when a central bank buys the bonds that the government is selling, by printing money. that is exactly what ben bernanke is doing. the fed is buying 90% of the bonds the government is selling. and to say that it's not monetization, because at some point in the distant future he's going to sell the bonds that he's buying, sell them to who? how can it possibly be -- how could you sell trillions of dollars worth of treasuries and mortgage-backed securities? who's going to buy, at what price, if the fed ever tried to exit, it would create a financial crisis that would make 2008 look like a sunday school picnic. so the fed is going to print and print and print. it's going to make up one excuse after another why it's not going to stop, and the only thing that's going to put an end to this party is a collapse of the dollar, even against currencies like the euro. and it is coming. the dollar is going to be in free-fall one day. prices are going to sky rocket for consumer goods. it's ultimately the bond bubble

is going to burst. and then reluctantly, when his back is to the wall, the fed might finally do the right thing. but it is going to be an economic bloodbath when they do. >> well, meter, once again you didn't welcome the week with a lot of optimism there, but we're going to have you back and monitor the new historic movements announced in the last fed meeting. carl, back to you. >> all right, rick, thanks so much. bell is about to sound all across europe in a couple minutes. we'll get the close and the impact here this afternoon. talk maybe about berlusconi's engagement we we come back. the s military families face, we understand. at usaa, we know military life is different. we've been there. that's why every bit of financial advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad! dad! [ applause ] ♪ [ male announcer ] life brings obstacles. usaa brings advice. call or visit us online. we're ready to help.

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the european markets are closing now. >> and with that we surveyed the landscape of both green and red. want to bring in michelle caruso-cabrera as markets close in the uk and across europe. a lot going on. a lot in italy. >> it's an all-italian version of the european close right now, carl. mario monti, contrary to reports last week that he did not want to run for prime minister again, we now hear he's undecided, and may actually run for p.m. of the country. right now he serves technocratically. there's expected to be an election early next year, maybe in february or in march. he has told reporters that he's considering it. the cabinet member he spoke with earlier in the week said he's going to make an announcement sometime this week on television. when asked by reporters about his recent visit to the tomb of saint francis he said he did, indeed, pray there to help him make a decision about whether or

not to run. a man eagerly awaiting monti's decision is silvio berlusconi, the former prime minister of italy. we're pretty sure he has not prayed at the tomb of st. francis lately. he has said that he devil wants to be run for prime minister again however at the same time he's also made noises that suggest that he wouldn't run if monti runs. that's not set in stone. we're going to see what happens there. what berlusconi was definitive about, he's going to marry his 27-year-old girlfriend he says. political commentators in italy have cheaply suggested that he's doing this to look more like a family man ahead of his run in february. he is 76 years old. of course. and his divorce from his second wife is not final yet. that's been very bitter. remember they wrote letters to the editor to each other in the paper, as the process of their separation was occurring in their divorce.

addressing the parliament is also now a banking supervisor and also saying that the medium term outlook for the european economy looks to be challenging. in the category of the sky is blue. carl? thank you michelle back at hq. let's get a check on energy and commodities as well. sharon epperson is at the miami next for us today. >> looking at gold prices right now that are just under at $1700 an ounce level. rather subdued trading in the gold market. monday morning a lot of traders saying not willing to make any big bets with the fiscal cliff still looming and also some commenting on not sure what dodd-frank will bring in the new year, as well. so all of those are reasons to stay on the side lines for the moment. we are above a key technical level for gold. above the 1685 level. that is significant traders say and may lead to perhaps some upside momentum in the oil rice. not much momentum in the oil price, either. we're looking at oil prices that are in a pretty tight range. we did see in the commitment of

traders reports a reduction in the net long positions, though, for wti, crude futures. the big mover natural gas. natural gas has been on a seven-day losing streak down about 10% in that period of time. it's regained some momentum, it's supposed to get cooler in the middle to end of december. that's part of the reason why, perhaps, we're looking at a turn here in natural gas, as well as perhaps a technical trade here, as well. lifting up off that $3.25 level. back to you, carl. >> all right, sharon, thanks a lot. sharon epperson over at the nymex. bob pisani is here with what's looking at the big board. a lot of this based on reports out of d.c. >> well the good news is, we're anticipating some kind of deal. and we're moving in that direction. it's a good sign. look, to me, all of this talk over the weekend, it was very simple. let me just show you what the most important thing is. they're not going to do nothing. the market was afraid that they were going to do nothing. that's not going to happen now. we now know that they're moving towards some kind of deal. it looks like a tax hike for the

wealthy. we don't know where it's going to come down. half a million or a million dollars. some spending cuts. capital gains. that senate bill that was passed in july, a lot of people passing around 20%, 25% for capital gains. and dividends. are there. not -- not 39% that we were talking about for ordinary income. the grand bargain is still a long way off. some deal is coming at this point. whether you sell on that news i'm not going to say here. but, the deal is coming of some sorts. meantime, if you look, unusual groups that haven't been doing much in awhile are up today. and i think it's a little bit of optimism. new high for bank of america. again up 2.6%. all the big bank stocks are up. 1% to 3% today. that's certainly a nice sign. we haven't seen the leadership groups since the earnings season came out. take a look at some of the other ones. the airlines doing well. all the airlines to the upside except usair just turned negative. if you were to watch these, last week i did this, folks.

look what i put up on tuesday. the main reasons we're going up on the airlines for a couple weeks, more consolidation is coming. booking trends have been stronger. there's been a minimal impact on business travel, jet knew prices have been dropping. all this has been happening for several weeks so the airline index has been moving to the upside. another strong sector today, again this may be a little bit on the fiscal cliff issue, are the big home builders here. ryland is up 5%. that's a nice move, standard pacific, hovnanian, toll brothers to the upside. these stocks have been strong through the year. they've been sideways since their earnings reports came out several weeks ago. i think you've got a little bit of optimism on the fiscal cliff. >> and we'll get more housing. >> the sentiment indicator is coming out tomorrow. some other numbers on wednesday. >> bob, thanks a lot. bob pisani. kayla tausche has the market flash. >> carl, we've been back and forth about whether the reception of the iphone 5 in china is going to be good or

bad. some checks on friday said it was muted. that led suppliers down. we're seeing them see some relief from that pressure. today may be a correction from that downtrade on friday. qualcomm one of the best trades today, also skyworks solutions. also favorable moves for avago and cirrus logic. >> the likes of fedex, oracle and rim reporting results. what do you need to know before the results come out? let's bring in christine short, senior managing of s&p capital iq. >> great to see you, thank you. >> what's amazing is the -- how the expectations for income or earnings have come down just since october 1st, right? >> right. and you're right. they've completely cratered. if you recall back during the third quarter earnings season, when we entered the season, we were seeing third quarter estimates were negative. we were looking at fourth quarter estimates in the double digits. and what many were saying is how is this upon that we're going to

have a negative third quarter but we're going to rebound to this extent in the fourth quarter. since then, analysts have certainly ratcheted their estimates down in line with what is more reasonable. looking at s&p capitalized 3.6% for s&p 500 earnings. so definitely more reasonable than the 10% that we were looking at in the beginning of october. >> all right. we mentioned some of the big names coming up. i don't think materials name is on the list. that's probably a good thing given what's happened to expectations in that sector, right? >> yeah, really. materials isn't expected to be negative for this quarter. but they are the sector that have seen estimates drop to the greatest degree. so right now estimates for materials are looking to be about 4.5%. that's compared to about 25% if we look back to the beginning of october. so, analysts have really focused in on materials. and it's not surprising, considering what we saw last quarter from metals and mining companies. specifically alcoa, even companies that aren't really within the s&p 500. rio tinto learning that they were expecting the fourth

quarter. when we look back at the guidance, specifically metals and mining industry, it's not surprising to see analysts sort of draw down on those estimates. >> yeah, of course, alcoa and a lot of the materials companies closely tied to china. we have seen some signs of stabilization there. i wonder if the mood has gotten too negative on that front? >> last quarter we saw, rio tinto, many other materials companies coming through and saying look, we're not going to see double digit earnings in china anymore. that's no surprise. they were ratcheting gdp growth down from 8%. saw it get as low as 7%. we've seen that stabilize somewhat. so at 4.5%, it certainly is not the negative growth we saw in the third quarter. but it seems as though those materials estimates have stabilized and are looking for reasonable growth in the fourth quarter. >> so this week among the big ones, the fedex, oracles, dardens, rims, are you making a call at least on a sector regarding those. i'm looking for some of the mentions of those names in your latest report. fedex comes up, but it's in

reference to some of the workforce reductions they've made. >> as we look at industrials, they are expected to be our biggest lagger for the fourth quarter down about 2.2%. you know, that in contrast to the industrials, very strong, but you think back to what fedex said in the third quarter, they were predicting a pretty weak fourth quarter. even a weak first half of 2013. so it will be interesting to see what they report this week because they were one of the companies that had negative guideness going into the fourth quarter. >> obviously receive knvenue fig we look at. christine, thank you so much. >> thank you very much. >> christine short. coming up how retail power house iconix brand plans to ring in the green this holiday season. the company's president and ceo will join us live when we come back. [ male announcer ] citi turns 200 this year.

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♪ [ male announcer ] oh what fun it is to ride. get the mercedes-benz on your wish list at the winter event going on now through december 31st. [ santa ] ho, ho, ho! [ male announcer ] lease a 2013 e350 for $579 a month at your local mercedes-benz dealer. coming up on "halftime" citi downgrades apple less than a month after calling it a buy. the man who made that call is only on "halftime." and vanguard's chairman and ceo exclusively on how fwoes protect your money from the fiscal cliff. and is caterpillar the next stock to surge. two traders, two opinions, one big debate at the top of the hour. carl we'll see you in 15 minutes. >> all right, scott. you might have some news from washington as well. a white house official telling nbc news that the president and house speaker boehner are meeting at the white house as we speak to discuss the fiscal cliff. dow popped on that news when it first broke on some of the

wires. currently sitting close to highs of the session up about 85 points. want to bring you the latest details on the newtown connecticut shootings. the town is grieving after the horrific events at sandy hook elementary on friday that left 20 children dead. danielle leigh is live in newtown with the latest. >> good morning. and today is the beginning of a very hard week ahead as families begin saying good-bye to their loved ones and burying those victims who did not survive this tragedy. the first funeral will be today for those victims, starting very soon. the first for 6-year-old nora whose twin sister survived the shooting in a different classroom and 6-year-old jack pinto who was a big new york giants fan. these parents burying their children, something no parent should ever have to do. unimaginebly difficult, saying good-bye, and struggling to move on and pick up the pieces. meanwhile, police are giving us anion date in their investigation. both the school and the shooter's home remain a crime scene today. they say they are gathering a

significant amount of evidence that will help them possibly determine a motive in this terrible crime. also, later today, teachers and staff are meeting to best discuss how to handle this tragedy moving forward, as tomorrow students begin returning to their classrooms. that said, students who attended sandy hook elementary are indefinitely excused. danielle leigh, carl back to you. >> danielle, thank you so much for that report. that shooting has re-ignited the debate over gun control in the country and the safety of schools here. hampton pearson is following that angle in washington. >> hi, carl. first of all in the aftermath of the newtown tragedy, all kinds of examples of beefed up security at schools nationwide, a couple examples, a school board in pittsburgh suburb authorizing police to carry guns on school property in the washington, d.c. area, a nearby fairfax county, parents got letters over the weekend alerting them to look for a more visibility police presence outside schools. back here on capitol hill, the

revived gun control policy short list, especially among gun control advocates includes a call to restore the assault weapons ban. that expected from california senator dianne feinstein. new york senator charles schumer wants restrictions on those multiround bullet clips. the newsmaker today, west virginia senator joe manchin, avid hunter and lifelong member of the national rifle association making news with his call for reasonable restrictions on guns. the senator saying, in part, we can protect the accepted amendment right, we can protect it and we will protect it but we can look also at ways we can make our country and our children more safe. one other thing to keep in mind, since friday, on the white house, we the people petition website, there've been more than 142,000 signatures calling for tougher gun control measures. that's my update for now. carl, back to you. >> hampton, appreciate that very much. hampton pearson in washington. now to more on retail. they are responsible for some of

the most recognizable retail brands in the market. from badgley mischka to joe boxer. iconix does it all. the company's ceo will join us live after the break. we'll talk about holiday sales and the state of the consumer. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade.

take a look at the dow today, sitting about 10 points from triple digit territory, and that pop as we told you before the break came just as the white house official told nbc news that the president and speaker boehner are meeting at the white

house over the fiscal cliff. with more on that we want to get to eamon javers in washington as to what this might mean here eamon. >> carl, i think one of the key things to look for here is going to be who was in the room at this meeting. we've been badgering the white house and capitol hill officials in the few minutes since the news broke, as to exactly when this meeting started, who is in the room, and what they're discussing. obviously, no details are forthcoming as of right now. we're expecting a little bit more of a readout once the meeting is over with, we might be able to find more information. remember at last week's meeting, we had secretary geithner in the room, rob nabors, the chief white house liaison to capitol hill, along with speaker boehner and one of his aides. that gave me a sense that they were getting down to a fairly specific level of details. just the two principles, the president and speaker, you'd expect more of a generalities in terms of the conversation. so we're going to be looking for that. and also, who scheduled this meeting? it was a surprise to all of us here in washington.

it was not something that was telegraphed in advance. so a surprise meeting but things are moving pretty fast on the fiscal cliff talks. >> that's important color eamon. thank you for that. with a week left to go until christmas eve retailers are prepping for a critical final seven days. iconix brand group ceo neil cole joins our courtney reagan. >> thank you very much. iconix brand group may not be a household name. its brands certainly. iconix hands candy's, i could go on and on. there are more and more. neil cole is the ceo of iconix group. thank you for being here with us, neil. a big week left to go. so you sell your brands in retailers from target to macy's to saks. how is holiday going so far? >> it started off really well. it was a pretty big black friday or cyber monday. but the last week to ten days were pretty slow. everyone's very hopeful that the last seven, eight days are going

to be strong and make for a good -- >> you've got an extra few days this holiday season between thanksgiving and christmas that we didn't have last year. are you working with retailers to do anything special to amp up that energy, make sure consumers are aware of your brands, attract them to them? >> there's a lot more marketing plans. a lot of retailers keep close to the vest their surprises of what they're going to do, whether it be extra sales which i think possibly is going to happen and everyone's going to do whatever they can to get those dollars in before the holiday. >> right. and you sell your brand in walmart, in kmart, target. also we have saks, bloomingdale's, neiman marcus. you get the low, the mid and the high end consumer. how is each group feeling this holiday season? the fiscal cliff talk is everywhere and walmart ceo think it could impact holiday spending. >> there's a strange feeling throughout. i think everyone's pretty hopeful there will be a deal. big question is the american consumer understand it. i think they, you know, uncertainty is not good. at the end of the day i think

we're going to pull through and be a strong holiday. >> with everything that's been going on, unfortunately, with sandy hook emtry is there anything that iconix group is doing to work with malls or retailers just to make sure that there are safety measures in place? because we know there are going to be a lot of people out hitting the malls. >> that's a good question. and i think it's going we're going to be talking about the next day or two. we really worked on last week was sandy and the hurricane relief and all the charitable efforts we've done with our brands to help in the rockaways. but you know what happened over this weekend was just so horrific and such a tragedy. so the security that will happen at the malls i'm sure is just needed. but hopefully we'll be able to do something about gun control. >> and you just recently finished that acquisition of umbro from nike. that adds to your athletic brand. is that a growth strategy going forward? >> it's more of a growth story international. about a third of our business comes from outside of america.

we're working really hard to acquire more brands outside of this country because we think it balances out our principle yo and big opportunity for growth in countries like china, brazil, india, so we're really looking at some of the emerging countries for our big growth over the next five to ten years. >> how are some of those emerging countries and their consumers dealing this holiday season? different from what you're seeing in the united states? >> i think so. we're hearing a lot more strength happening in certain parts of the world. where there's more of an emerging consumer. so it's not -- america's difficult. we're kind of some can argue overstored and very competitive. but in countries that have such vast growth populations that are happening, whether it be china, brazil, india, big opportunity for growth like in america 20 years ago. >> thank you so much, neil cole, ceo of iconix brand. carl, back to you. >> courtney, thank you so much for that. straight ahead, highlights from your exclusive interview with richmond fed president jeff lacquer. see what liesman's take is after interviewing him earlier on. i always wait until the last minute.

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and cut! very good. people are always asking me how we make these geico adverts. so we're taking you behind the scenes. this coffee cup, for example, is computer animated. it's not real. geico's customer satisfaction is quite real though. this computer-animated coffee tastes dreadful. geico. 15 minutes could save you 15 % or more on car insurance. someone get me a latte will ya, please? richmond fed president jeff lacquer sitting down for an exclusive with steve liesman. steve joins us from charlotte, north carolina, with highlights on what was a must-see interview. good morning, steve.

>> good morning, carl. i thought it was interesting that the richmond fed president, who has dissented at every meeting this year, and is known as a hawk may have done the doves a favor, pointing out that he believes that the 6.5% unemployment rate target, which is in the fomc statement may be as much as three years off. he also explained in greater detail his reasons for his dissent saying the fomc appears to be straining its credibility. >> it should be pretty clear that this committee is straining. to provide as much stimulus as possible. without endangering our price stability credibility. my worry, and the reason we seem to be willing to test the very limits of that credibility. >> he also added that one problem with the 6.5% unemployment rate is people may get the wrong impression that the federal reserve can, in

fact, affect long range unemployment. now in a bit of the interview we did just for the web, it will be up there soon, i did ask him about whether or not people should rely upon the fed buying $85 billion a month for a total of a trillion dollars for the whole year. >> what the chairman emphasized in his statement at the press conference is that we would re-evaluate the efficacy and the costs of these programs going forward. that might sound like boiler plate but i think that's going to be taken really seriously. i think that ought to be taken really seriously going forward. we don't want to find ourselves on a treadmill not thinking about it and bounding out asset purchases month after month. so that's a piece of the interview you can see by going to cnbc.com. he also discusses the fiscal cliff as well as inflation. carl, interesting interview from a dissenter. and maybe he brought a few people over to his side. >> i was thinking, ste,